May, 2017 | Allan Gray Orbis Foundation
The role of education in the Entrepreneurial Journey | By Teri Richter

The role of education in the Entrepreneurial Journey | By Teri Richter

Screen Shot 2017-05-30 at 10.55.04 AMEducation and the pursuit of academic excellence are at the core of the Foundations entrepreneurial journey. The Foundation believes that a strong founding and exemplary performance in academics and secondary and tertiary education form the building blocks of the journey for the high impact entrepreneur. The current write up aims to contextualise the empirical argument for this relationship and then define academic excellence in the words of the Allan Gray Beneficiaries.


In the words of academics:

The proposition of formal education contributing positively towards entrepreneurship is well supported by the academic literature. As suggested by the 5 key findings of the 2008 meta-analysis by Van der Sluis, Van Praag and Vijverberg (p795):


  1. Education does not influence the likelihood of an individual self-selecting entrepreneurship as a career,
  2. The effect of education on entrepreneurship performance is positive and significant
  3. The return to a marginal year of schooling is 6.1% for an entrepreneur
  4. The effect of education on earnings is smaller for entrepreneurs than for employees in Europe, but larger in the USA
  5. The returns to schooling in entrepreneurship are higher in the USA than in Europe, higher for females than for males, and lower for non-whites or immigrants

Further studies in a developing country context support the notion that an added year of education can raise entrepreneurial profits by on average 5.5% (Kolstad and Wiig, 2015). The Global Entrepreneurship Monitor (GEM) study conducted by Herrington and Kew in 2010 suggests that specifically in the South African context there is a positive correlation between opportunity-driven entrepreneurship and levels of education. Lastly, the link between secondary and tertiary education and formal entrepreneurship is suggested by Jiminez et al (2015), as being an enabler for entrepreneurship through increasing self-confidence, lowering the perceived risk of starting a business and developing human capital.

In this regard, the Foundation has been collecting outcome level data from our beneficiaries over the past three years to build a comprehensive definition of academic excellence according to our own beneficiaries.

In the words of Allan Gray Scholars and Candidate Fellows:

Defining academic excellence:

This work has resulted in the following definition developed through Scholar and Candidate Fellow feedback. The Allan Gray Scholars and Candidate Fellows describe academic excellence as

  1. Doing your best,
  2. Understanding your work and applying your knowledge
  3. Continually improving
  4. Setting targets and achieving them for themselves.

“Doing well is performing to the best of your ability and not comparing yourself.” Grade 8 Scholar, Gauteng

“I just think that doing well means that you’re improving in what you did last time, even if it’s by 1%, 2% you’re still like … you’re nearly there and you’re nearly reaching your goals, so it’s one step closer.” Grade 10 Scholar, Western Cape

“I would really say it’s making knowledge your own and understanding things. Einstein said that if you can explain something to a child then you truly understand it. So I try that – can I really explain this to someone in a way that they can understand. So I thinking of learning as you should really understand it, it’s not just about cramming.” Year Engage, Gauteng, University of Pretoria

Most of the responses highlighted that academic excellence and achievement is about performing to the best of your ability continuously. Beneficiaries noted it is important not to compare yourself to others.

Barriers and enablers

During the pursuit of academic excellence, there are many barriers that beneficiaries must conquer, the most important barriers noted by Allan Gray beneficiaries in the pursuit of academic excellence include:

  • Time management
  • Prioritisation of tasks, activities and deliverables
  • Dealing with pressure to perform
  • Learning to overcome a fear of failure
  • Optimal access to resources

Identifying these barriers is essential for programme development and ensuring beneficiaries receive the optimal support to learn appropriate coping mechanisms and tools to address these barriers. In addition to barriers, beneficiaries also noted the key enablers to their academic performance and mentioned the following:

  • Receiving support from parents, teachers and the funding partner – the Foundation
  • Approaching each task with a positive attitude
  • Being motivated to succeed
  • An optimal amount of competition between peers – but mostly themselves.
  • Being passionate about what you are doing

“Love what you do. You cannot possibly try to be amazing at something that you hate. It’s going to be an upward battle and you’re not enjoying any of it” . Year Explore, Western Cape, University of Western Cape

Academics and entrepreneurship

From the definitions of our own beneficiaries, it suggests that through the outcome of pursuing and achieving academic excellence, individuals learn how to overcome failure, deal with pressure, set goals and meet them, continually improve and do their best. The literature further suggests that secondary and tertiary education further develop an individual’s self-confidence, lower their perception of the risk of entrepreneurship and enhance their ability to develop human capital. These abilities and traits link to those we see in successful entrepreneurs and support the notion that the academic journey can positively contribute to the preparation and equipping of individuals in their entrepreneurial process.


Jiménez, A., Palmero-Cámara, C., González-Santos, M.J., González-Bernal, J., Jiménez-Eguizábal, J.A.,            2015. The impact of educational levels on formal and informal entrepreneurship. Business         Research Quarterly Vol 18:3, pg 204-2012.

Kolstad, I., and Wiig, A., 2015. Education and entrepreneurial success. Small Business Economics, Vol        44:4, pg 783-796.

Van der Sluis, J., Van Praag, M., and Vijverberg, W., 2008. Education and entrepreneurship selection and performance: A review of the empirical literature. Journal of Economic Surveys, Vol 22:5, pg 795     – 841.




10 Entrepreneurial readings recommended by our Fellows

10 Entrepreneurial readings recommended by our Fellows

What websites should entrepreneurs read for inspiration? We asked our Allan Gray Fellows what their daily entrepreneurial reading consisted of for inspiration, knowledge and growth. The top 10 entrepreneurial readings in no particular order are as follows:

  1. Standford e-Corners: A free resource started by Standford University where they share videos, podcasts and articles to support you on your entrepreneurial journey. Standford believes that entrepreneurship is about more than just starting a business.
  2. Medium: An app you can download and receive daily publications on topics that interest you.
  3. Tech Central: A news and information resource aimed at South Africans who are involved in the information and communication technology industry.
  4. For A website started by David Skok, a serial entrepreneur who became a venture capitalist. The website is a tool used by David where he writes articles to help entrepreneurs who are starting businesses.
  5. Harvard Business Review: Articles written by academics and experts from different disciplines, where they share their ideas.
  6. TED: A nonprofit dedicated to sharing ideas through video talks which are about 18 minutes or less. TED talks are inspiring and a must see.
  7. Under 30 CEO: A website aimed at young entrepreneurs and professionals. Articles include interviews, start-up advice and finance.
  8. Mixergy: A platform where you can learn from experienced entrepreneurs.
  9. Blake Masters: Peter Thiel, author of Zero to one, start-up course.
  10. This week in startups: Hosts weekly interviews with startups who operate in the interweb space. Tune in weekly to listen to entrepreneurs’ stories, as they share what’s happening in the market and the challenges they face.
Going beyond a profession

Going beyond a profession

With his love of math and science at school, Bradley Wattrus had the makings of a successful actuary right from the start. Yet, the promise of corporate success paled in comparison to the potential impact he could have as an entrepreneur. This is why he applied to the Allan Gray Fellowship – the notion of high-impact entrepreneurship resonated with him. “I remember feeling that this was a vision for the future of RSA that I wanted to be a part of.”

It has been a mere four years since Bradley co-founded Yoco Technologies, where he is now Chief Financial Officer, and a few more since he started his journey as an Allan Gray Fellow, yet there’s already evidence that he’s impacting the financial technology industry in a significant way. The firm is focused on helping SMEs grow by providing integrated payments, point-of-sale software and access to financial services. They now have 5 000 merchants using Yoco, with 300 000 traditional card terminals in the market and 70% of their merchants accepting card payments for the first time.

SMEs are underserved on many levels as traditional organisations tend to focus on larger corporate clients. This means that less than 5% of SMEs and sole-proprietors in the country have access to card acceptance services, while over 70% of the population has at least a debit card. Yoco provides small merchants with a convenient point-of-sale experience, and they’re able to do this under a profitable business model without imposing any fixed fees on the merchant.

It may only have been a few years since Bradley co-founded Yoco, but he’s been flexing his business muscles since primary school. He made his first foray into entrepreneurship as his school’s Coca-Cola vendor and won an award for entrepreneurship. Later on, he was appointed to the school’s newspaper committee and, armed with advice from his dad, generated more money through the newspaper than the school’s fundraising committee. Bradley’s father made a point of teaching his children to think in terms of capital and not pocket money. It is no wonder then that Bradley and his brother “were regularly exploring different side projects.”

At the end of his school career, Bradley applied to the Allan Gray Fellowship and found the challenges it posed enlivening. Though he excelled at school, he seldom felt challenged enough. After school, however, the combination of his BSc (Hons) in Actuarial Science at the University of the Witwatersrand and the Foundation’s entrepreneurship programme more than made up for that lack. When Bradley was a Candidate Fellow (2007–2011) the Foundation required them to run two small businesses over a six-week period each. Bradley’s first business was a coffee stall at Rosebank Market, which ran on Saturdays, while the second was a service involving crying infants and clowning manoeuvres, i.e. preschool photography.

When asked how he managed to juggle both his degree course and his Foundation commitments, he concedes that it was indeed tough, but the experience trained him in the mechanics of starting a business. And it’s an experience he’d greatly encourage others to explore. Though the Foundation’s focus has shifted away from the intensive six-week-small-business approach, it still challenges Candidate Fellows to cultivate the kind of thinking associated with such an approach. As Bradly puts it: “If you are interested in going beyond a profession and making a significant impact on the region I would encourage you to apply [to the Fellowship]. The value is really in the opportunity to expand your mindset and leave university with a much broader perspective than you may otherwise have had.”


Loans need a rethink to ensure inclusion | By Kevin Rodrigues and Co-Pierre Georg

Loans need a rethink to ensure inclusion | By Kevin Rodrigues and Co-Pierre Georg

Borrowing sorrow: SA has a poor savings culture, with only 33% of adults having any form of money stashed away. Statistics show that hire-purchase, credit-card and store-card debt are the biggest culprits when it comes to lower-income earners becoming debt-stressed. Picture: DAILY DISPATCH
Borrowing sorrow: SA has a poor savings culture, with only 33% of adults having any form of money stashed away. Statistics show that hire-purchase, credit-card and store-card debt are the biggest culprits when it comes to lower-income earners becoming debt-stressed. Picture: DAILY DISPATCH

High-profile development organisations around the world such as the Bill and Melinda Gates Foundation are recognising the transformative power financial inclusion can have on the lives of people at the base of the pyramid.

These organisations are investing heavily in developing insights through organisations that promote effective policy, such as the Consultative Group to Assist the Poor. Regulation that promotes financial inclusion can benefit greatly from the latest findings and other case studies globally.

According to the latest Finscope survey on financial inclusion, only 33% of South African adults have any form of savings, either at home or with formal or informal institutions. This is far below the next lowest Southern African Development Community member state, Malawi, which has a consumer savings rate of 43%. There is much work to be done to promote saving in SA, especially for those at the base of the pyramid.

For those in this band, the ideal savings product should be easily and affordably accessible, transparent, easily understood and incorporate commitment devices, such as peer pressure. It should also not require restrictive documentation.

SA’s Financial Intelligence Centre Act (Fica), especially its documentation requirements, limits the ability of formal providers to serve these people through market viable products.

Fica’s exemption 17 contains a provision for banking institutions to require only an identity document to open accounts with a balance limit of R25,000, among other limitations.

This exemption should be expanded to include investment institutions, for example unit trust managers, to open the investment market to people who cannot produce a proof of residence and for whom it would be too expensive to procure a proof of residence.

This would make this market more attractive to investment service providers who could then begin to optimise their products for the poor.

The savings culture has adverse, long-term implications for the population. National Treasury estimates that only 6% of South Africans will be able to maintain their standard of living at retirement.

This is likely to exacerbate the savings predicament as younger generations will need to support older generations as they reach retirement age.

Access to retirement funds in SA tips above 10% only in the upper-income quartile. This is largely due to the scale challenges small, medium and micro enterprise (SMME) employers face with providing access to such benefits for employees.

The government should attempt to replicate the success of the UK’s mandatory auto-enrolment retirement fund, the National Employment Savings Trust. It provides an affordable national retirement fund option to which all SMMEs must subscribe their employees if they do not already have an alternative.

This retirement plan would have an option for employees to opt out of the service. Default provisions like this have been shown by Richard H Thaler, professor of behavioural science and economics at the University of Chicago, to promote positive savings behaviour.

This system provides latitude to employees to refuse the benefit should they be unable to afford the contribution.

A compulsory state pension fund has been a priority for SA’s Treasury for several years and is under discussion with key stakeholders, having been tabled at the National Economic and Development Labour Council in November 2016.

Despite the slow improvement in the South African savings landscape, access to consumer credit has grown rapidly, driven by microfinance institutions, salary-based lenders and alternative banks.

These lenders provide credit to consumers at exorbitant premiums and are highly successful. In contrast, and despite notable successes and progress, government development finance initiatives such as the Industrial Development Corporation struggle to reach scale and have high surplus balances.

The government could consider the example set by the Thailand Village Funds initiative, which deployed R400,000 per community to settlements across the country. This was used for loan funds administered by community leaders who have flexibility to set interest rates and repayment terms. This initiative has proven effective in Thailand, with 70% of participants reporting improved quality of life and 92.6% of participants repaying in full and on time in 2010.

The Centre for Financial Regulation and Inclusion’s research has found that community-run finance initiatives prove more effective than external initiatives as there is less information asymmetry between community members and better tailoring of loan terms.

Much can be done to alter the microfinance landscape in SA to promote responsible lending.

Aside from the progress of the National Credit Act and interest regulations, South African regulators should consider the example of Bharat Financial Inclusion, an Indian microfinance corporation, when regulating the way these institutions incentivise employees.

Dedicated to responsible lending, Bharat tries to ensure the incentives of the poor and their loan officers are aligned by not basing their loan officers’ salaries on their loan portfolios.

Mashonisas — or credit providers — tend to get a lot of negative attention for their lending practices and interest charges. However, when performing a quantitative analysis using data from the National Income Dynamic Study, we find evidence that mashonisas may not be the worst source of debt for poor South Africans.

We ran a statistical model to investigate what predicts whether people with a median income below R3,897 per month and some debt become debt-stressed.

We found that having hire-purchase debt, store-card debt or credit-card debt makes people at least twice as likely to be overindebted than having a loan from a mashonisa.

Given that these more adverse sources are formal and thus easier to regulate, the regulatory focus should be on promoting more responsible lending in these areas.

Aside from these regulatory measures, the value of enhancing consumer financial education cannot be discounted. The underprivileged should be able to fully understand the implications of their financial position and decisions and how best to manage their financial lives. Despite significant progress having been made through regulation requiring financial institutions to put in place consumer education programmes, challenges remain.

The most notable challenge is the language barrier and skills concentrated with English speakers. To counter this, the government should consider making it a graduation requirement for finance students to engage in community financial education and provide these students with translation resources where required.

The regulatory landscape can benefit greatly from implementing many of the recent insights developed through extensive investment in financial inclusion research.

Much research still needs to be done on how these insights can be implemented in a South African context, especially with new data available on platforms such as Insights2Impact.

We look forward to the significant improvements in South African financial inclusion and on the lives of the poor that will come from these findings and the implementation of pro-active regulation.

• Georg is a senior lecturer at the African Institute of Financial Markets and Risk Management and Rodrigues is a management consultant and has a masters of commerce in risk management of the financial markets

Source: Business Day


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